Today's Traiding Guide

Why Women are Great Investors


Jun.26.2013

Women in Japan are pioneers in at-home forex trading. While forex can have an image of being risky, Japanese housewives or the so-called Mrs. Watanabes have found ways to invest in currencies with eliminated risk. They have found a balance between their savings and investment capital, and they manage their risk properly. Does successful trading only apply to Japanese women, or is it a gift given to all women around the globe?

First off, having taught to both men and women from different backgrounds, I have discovered that women in general make better investment decisions than men and therefore are better candidates to trade forex. Additionally, increasing number of female traders all around Asia, the Middle East and Europe gives us a green light. Interestingly enough even male traders themselves admit to this! Not to mention the research and university studies have also backed me up on the reasons why women can be great forex traders:

1. Women have more patience

Being patient is one of the keys of success in forex trading, and women in general are more patient. The hardest thing for men is to sit and watch the screen when there is no signal. Women however, can keep their cool. This arises from women’s unique talent of multi-tasking. It’s very easy for a girl to wait for the next forex signal (and to avoid missing it!) while doing her manicure, chatting on the phone, cooking, or reading her favorite fashion magazine.

2. Women admit when they are wrong quicker and easier

In general women have an easier time admitting that they are wrong or they have made a mistake. For men, “I made a mistake” or “you are right” is a very hard thing to say. Realizing and admitting that you are wrong is very important in forex trading. If the prices are going against you and you are tempted to move your stop, the possibility of you losing an even larger amount of money gets higher.

3.Women are more teachable

Just because they don’t have as much ego issues as men, women pay more attention to forex education and follow the rules. Following your guts only works 10% at a time in forex trading, and as we will discuss later, women actually even have better “guts” than men. Forex education is absolutely necessary for traders, as well as learning about money management, positions sizes, learning the system, and the general discipline and trading psychology.

4.Women don’t have the “alpha male complex”

There is a difference between having a pride on your work, and wanting to prove that you are the king of the markets. Trading for men is mostly about being better than other men (an alpha male competition.) This leads men to take unnecessary risks and feel extremely bad when they don’t make large gains.

Conversely, men get excited after making some money and just to prove their majesty, they may enter in a huge position without carefully analyzing the markets, and just for the reason that they think they have already captured the markets and they know best. Interesting to know is that most of the losses in forex trading come after a huge success.

Women on the other hand, don’t get too proud and won’t start doubling their trade size. The pride in a trade can easily go against you. While making continuous successful trades for a large period of time is generally not likely in forex trading, women’s ability to let go of the pride and let the price hit the stop, can prevent a huge loss.

5.Women are more risk-averse

Women are simply more risk-averse than men, which can be another treasure in trading risky markets. According to an article published in The New York Times, it has to do with pornography, motherhood and the caveman brain. Researchers have found that activating the nucleus accumbens — a brain region that is stimulated when you eat delicious food or look at an attractive person — can affect financial risk-taking. When young Stanford men were shown pictures of partially clothed men and women kissing, that region of their brains was activated. And when they were then given financial tests, the men became more likely to “make high-risk gambles.” Women didn’t respond much to the same pictures.

According to Alexandra Bernasek, a professor of economics at Colorado State University, before the dawn of history, aggressive risk-taking might have given men an advantage in finding mates, she said, while women might have become more risk-averse to protect their offspring.

6.Women invest better in general

A study of 100,000 portfolios showed that women’s investment returns outperform men’s, 18 percent to 11 percent. This could be because women are typically more cautious with their investment decisions and think longer term. According to a new study, men were more likely to sell stocks at the bottom of the market than women during the financial crisis, based on I.R.A. account activity in 2008-2009 at Vanguard, the mutual-fund company. It’s for the same reason that men have to ask women out on dates and never stop to ask for directions (and other universal truths about men and women).

“There’s been a lot of academic research suggesting that men think they know what they’re doing, even when they really don’t know what they’re doing,” says John Ameriks, head of Vanguard Investment Counseling and Research and a co-author of the study. Women, on the other hand, appear more likely to acknowledge when they don’t know something — like the direction of the stock market or of the price of a stock or a bond.

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